Court Dismisses Claim Against ESOP Fiduciaries

In Pennsylvania Federation, Brotherhood of Maintenance Way Employees v. Norfolk Southern Corp., No. 02-9049 (E.D. Pa., 10/12/04), a federal district court has issued one of the strongest decisions yet supporting the argument that fiduciaries following the requirements of a 401(k) plan to invest in employer stock are not violating their duties, even if this decision may not, in retrospect, seem prudent. The court dismissed plaintiff claims that fiduciaries of the company's 401(k) plan violated ERISA by investing in Norfolk stock because they wanted to bolster its stock price. The court ruled that even if the factual allegations were correct, the plan was operated according to its requirements, so fiduciary motives in investing were not at issue.